Debt-to-GDP Ratio

(redirected from Debt-GDP Ratios)

Debt-to-GDP Ratio

A ratio of a country's national debt to its GDP. The debt-to-GDP ratio is one way to estimate whether or not a country will be able to repay its debt. The higher the ratio is, the more likely a country is to default because its government has borrowed too much relative to the ability of the country as a whole to repay. This may affect the country's sovereign credit rating. However, this ratio is not the only metric used. For example, the United States and the United Kingdom maintain national debts that approach 100% of GDP, but both have AAA credit ratings because the political risk in both countries is very low.

References in periodicals archive ?

But it appears as though the country has at least 10 years of debt-GDP ratios that are lower--sometimes considerably lower--than ratios that are common in Japan, many developed European economies, and in emerging markets.

Small changes in large programs can have a significant effect on future debt-GDP ratios.

Keywords: fiscal policy, federal debt, interest costs, debt-GDP ratio, health costs, entitlements

Even while the deficit is relatively low, it is not low enough to lower the debt-GDP ratio significantly.

The changing nature of the long-run federal budget problem

We find that the negative relationship between debt and GDP growth is influenced by outliers or exceptionally high debt-GDP ratios.

To reinforce this point we construct bar diagrams with median debt-GDP ratios and median growth rates for different sub-periods in Figure 2.

As growth declines, debt-GDP ratio rises, so the causality may run from low growth to high debt-GDP ratios.

For example, high public debt could be used to improve schooling which is found to have a larger positive impact on growth than the estimated negative impact of public debt-GDP ratios.

The debate on expansionary fiscal consolidation: how robust is the evidence?

The country has long coped with similar debt-GDP ratios for some 20 years after profligate government spending in the 1980s.

Bonfire of the vanities

In the next section we develop and estimate a simple macroeconomic model to determine the effects of monetary, fiscal, and exchange rate policies, on foreign debt and debt-GDP ratios of Costa Rica, El Salvador, Guatemala, and Honduras.

We may then identify the appropriate policy mix to be used to achieve acceptable levels of foreign debt and debt-GDP ratios.

For the remaining countries, changes in the money supply did not significantly affect their foreign debt position or their debt-GDP ratios.

Macroeconomic adjustments for debt-laden economies: the Central American experience